I found myself stressing about the economy and the general political state of affairs the other day. Knowing that history seems to repeat itself, I did some research and found that the same economic worries we are fretting about today are not new. I was reading about the Panic of 1837.
Martin Van Buren, the 8th President of the United States inherited a mess. Well, it might not have been perceived as a mess. What started as economic boom under Andrew Jackson, ended up in ruins. New industries such as railroads, canals, and public real estate were accelerating the economy.
Jackson saw such a time of prosperity, that not only was he able to pay off the national debt, there was a surplus that was distributed to the states to be invested in more railroads and canals.
|Martin Van Buren|
Many nervous people, as well as states, hoarded their gold and silver. They paid their debts with paper bank notes. This bothered Jackson so much that towards the end of his presidency he ordered the treasury not to accept bank notes, and only accept gold and silver.
The banks restricted credit and called in loans.
Panic ensued just 5 weeks after Van Buren began his presidency, though. The panic was caused by speculative fever, or cheap land sales. The government was selling land cheaply, producing mass inflation. What followed was a five-year depression with high unemployment and failed banks.
He was blamed for it. They called him “Martin Van Ruin,” partly because he wouldn’t let the government interfere with the economy. [He was also called “the little magician;” some say because of his small stature, others say because of his ability to “magically” win all of his debates.]
Many blamed the banks’ irresponsibility. Funding these land purchases as well as mass-producing paper money lead to mass inflation.
“Out of 850 banks in the United States, 343 closed entirely, 62 failed partially, and the system of State banks received a shock from which it never fully recovered.”.
A four-year depression followed, with record high unemployment. Upon leaving office, he is quoted as saying, “As to the presidency, the two happiest days of my life were those of my entrance upon the office and my surrender of it.”